StartUps

Taxing periods: The GST hike is expected to provide a rough ride for used car platforms.

Taxing periods: The GST hike is expected to provide a rough ride for used car platforms.

By Kajal Sharma - 30 Dec 2024 09:29 PM

Bengaluru: Following the government's decision to impose higher taxes on their margins on the sale of tiny automobiles, India's used car platforms appear to be in for a rough ride after cruising at a double-digit growth rate over the previous five years since the epidemic. On Saturday, the Goods and Services Tax Council made the decision to raise the tax rate from 12% to 18% on the margins of suppliers selling small used cars, including electric vehicles (EVs).A used vehicle platform will now pay 18% goods and services tax (GST) on the margin (₹40,000) if it buys a small car for ₹1 lakh and sells it to a buyer for ₹1.4 lakh after refurbishing, as opposed to 12% previously. Eighteen percent has paid for used EVs and SUVs (sport utility vehicles).

Although companies will be able to offset this against input tax credits, startup margins are expected to be impacted in the short term by this initiative to harmonize tax slabs.Industry analysts predict that the 50% tax increase will hurt a sector that sold 51 lakh units in FY23, according to the India Blue Book report that was made public earlier this year. India continues to sell more used automobiles than new ones annually, as seen by the 42.3 lakh new cars sold within the same time period. According to Vikram Chopra, CEO of online used automobile marketplace Cars24.com, "such policies can affect affordability in a country where car ownership is still in single digits [in percentage terms]."

 

Newsletter

Subscribe our newsletter to stay updated every moment